5 Trends that Will Redefine Realty Sector in India

Sep 25, 2019 Share


India, being the world’s fastest growing economy, is the seventh largest economy in the world and is the second largest employment sector in the country. Development in the real estate sector substantially contributes to measure economic development of a country. With rapidly developing infrastructure, urbanisation, construction of metros, broadly flourishing IT sector and industrialization, the real estate sector in India is set to contribute nearly 13 percent to India’s GDP by 2025. Certain upcoming trends will not only redefine the realty sector in India but also contribute to the growth of the same. Let us take a look at some of these trends.
Office Spaces
Reportedly, the total area occupied by office spaces or work spaces has substantially increased by 20 percent in 2018. Establishment of work spaces directly or indirectly depends upon the infrastructural development in the country. For example, today, highways are rapidly developed with a speed of 27 kilometres per day which is tremendous as compared to the development in the previous decade. Infrastructural development demands growth in working and residential sectors. These factors are mutually dependent. In other words, you can say that rise in demand for work space or office space will definitely redefine the realty sector in India.
Concept of Co-working
With soaring sky-high prices, it can be difficult for individual entrepreneurs and other small scale organisations to afford the rent of a space. And so, to cut costs and let people invest more to promote their business, the concept of co-working was introduced. Co-working space can be defined as a space shared by different organisations or brands, who use the same infrastructure like utilities, equipment, reception and custodial services. Owing to the introduction of this concept, various start-ups are now able to focus clearly on their long term goals rather than worrying about the rental of the space. This concept has proved to be beneficial for various individual organisations and is said to flourish further.
Residential Sector
As mentioned earlier, infrastructural development attracts growth in working and residential sector. Urbanisation, increase in population and availability of employment opportunities are the key reasons for increase in demand for housing properties. Attractive and affordable offers have been provided by developers, which, in turn, has been the reason to boost the demand for the residential sector in India. Additionally, ‘housing for all’ initiative by the government of India is set to construct 60 million houses by 2020. With different provisions under Pradhan Mantri Awas Yojana (PMAY), it has been ensured that a house is built for every budget.

A total of Rs 30,000 crore liquidity support has been announced to the struggling housing finance companies (HFCs). Along with this, Finance Minister, Nirmala Sitharaman announced the merger of 27 banks into 12 public sector banks (PSBs). With these two major announcements and immediate actions taken in accordance with the same, the residential sector in India is about to witness a major paradigm shift. These two announcements are said to reduce interest rates on secured loans (home loans and car loans) which will invite people to opt for loans from PSBs. Thus, it is no wonder that the residential sector will revamp the realty sector in India.
Warehouse and Logistics
Introduction of Goods and Service Tax (GST) has been a key player for increased demand for space for warehousing and logistics. Implementation of GST has in a way aided to unite the 29 states and now 31 states in a single market. Reportedly, a centralised system was established bringing together small fragmented sectors or networks into huge and robust integrated chains. With this kind of development, developers have witnessed the potential for growth in warehousing and logistics.
Foreign Direct Investment (FDI) and REIT
The government of India recently announced that they would 100 percent of FDI in township and other development project in India which will prove to be a boon to fetch investments further. This would be proved beneficial further as well. Also, the introduction of Real Estate Investment Trust (REIT) in India has led to transparency in communication and transactions in the real estate sector. According to a report by LiveMint, the Embassy Office Parks REIT is set to raise Rs 4,570 crore through initial public offering (IPO). The same report states that the unit price of a REIT is in the range of Rs 299 to Rs 300 and the minimum application for the bid are 800 units and 400 units, thereafter.

Considering all of these factors, one can rightly say that these trends will definitely redefine the realty sector in India.

Note*: The mentioned details are based on study of current market trends and may vary according to the changes in the market and factors affecting it.

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